The Back Story on SFHA’s Past and Future

For problems at SFHA to be fixed, it’s not just SFHA that needs a restart. It’s also City Hall — specifically the Mayor’s office.

As HUD’s Public Affairs Officer for Arizona, California, Nevada and Hawaii until 2010, I saw public housing authorities struggling with budget cuts, maladministration and political agendas. But I also saw many housing authorities that succeeded in providing decent, safe and sound public housing for tenants, whether they are seniors, the disabled or low-income families.

San Francisco over that period was one story after another of horrors that primarily emanated from either the mayor’s office or a City Hall indifference that responded only to public relations dangers when bad press put problems on the front pages. So far, the pattern under Mayor Lee appears to be more of the same. It won’t work.

Whether mayoral corruption in the legal sense has been a root cause has never been proven, although FBI investigations into contracting during Mayor Willie Brown’s term when his close friend Billy Rutland was paid hundreds of thousands to lobby the Housing Authority but never reported any actual contacts may have set some kind of record.

The current HUD Inspector General investigation into SFHA contracts can be expected to seek records that might relate to referrals from the mayor’s office and that might shed light on why Mayor Lee took months to take action against Alvarez. Mayor Lee’s own record before entering Room 200 includes approving city contracts for one of Brown’s friends who was the subject of an FBI investigation and who HUD forced to repay funds from HUD accounts. Mayor Lee was also called to testify in a court case last year about his decision to award a contract to company that hired a Brown confidante to negotiate with the city when Lee was City Purchaser; his affidavit stated that he could not recall the case.

The record already shows that Alvarez himself felt comfortable seeking a meeting with Mayor Lee in order to have contracts cancelled by other city departments because the grantee annoyed him.

Here’s what we do know and what the mayor isn’t telling:

Blaming Washington is a tactic to evade accountability for local failures. Over the past dozen years, San Francisco either failed to apply for additional federal grants, was prevented from applying because it was being sued by the Justice Department over discrimination, or outright failed to meet minimum standards for getting units back on line or collecting rent. The total loss of funds over the past decade likely approaches or surpasses $100 million. For example, between 2008 and 2010, San Francisco passed up more than $5 million in federal funding simply because it didn’t implement a program intended to offset some of the federal funding declines. The city was notified repeatedly that it was losing funds.

Previously, San Francisco won over $100 million in federal funds by 2003 to replace poor public housing – building much better units at North Beach, Valencia Gardens and elsewhere. Mayor Newsom became the first mayor to actually refuse to apply for grants that averaged $22 million for each award even after his own appointed task force recommended that the city begin applying again. When Mayor Jordan’s Housing Commission failed to apply for grants once, he fired them, put in an application, and won more than $20 million. Mayor Newsom’s spin was that it was too much work to fill out the applications when the fact was that in order to apply San Francisco had to admit it did not meet minimum standards in management and required a waiver. That would have publicly embarrassed Newsom. Meanwhile money flowed into cities like Oakland.

The mayor’s office abetted poor and even criminal management rather than demanding results-based performance. In 2001, when former Housing Authority director Ronnie Davis was arrested on federal felony charges for his role in Cleveland before coming to San Francisco, many expected charges also to be leveled for his actions in San Francisco. But in a remarkable turnabout, Mayor Brown hosted a fundraiser to help Davis pay his legal fees and even held a reception for him, Washington blinked, leaving Davis to plea bargain on just the Cleveland charges.

When Henry Alvarez, now on leave as SFHA Director, went on a vendetta against the Housing Rights Committee, a tenant advocacy non-profit that works to help tenants living in poor conditions, Mayor Lee did nothing to stop his bullying tactics even though his office was well informed of his bullying behavior. The paper trail shows Alvarez seeking to have the mayor defund the Housing Rights Committee for its criticism of him. When that was not working fast enough, Alvarez went to the Foundation that served as the Housing Rights Committee’s sponsor to kill its funding that way. This was the same type of bullying that led Alvarez’ own senior staff to file lawsuits against him for harassment but now impacted the tenants directly. In the more than 30 years I have been in city government or written about it, I had never seen a department head try to destroy a community agency for raising concerns about tenant needs. Ed Lee knew but did nothing.

The situation exists because it has been in the interests of City Hall, so long as it is not a PR problem to ignore this desperate agency that offers “housing of last resort” for the poor in this expensive city. In exchange, a compliant SFHA can be an asset to a mayor who wants contracts awarded, union worker pay raised above standard rates to reward supporters, and even provide housing vouchers without working up the waiting list.

City Hall can safely ignore the needs of the city’s most vulnerable population because they live in a political ghetto. No one will risk their career on their behalf. For the most part, the worst public housing is located out of sight of most city residents – in Hunters Point, the Bayview, Visitacion Valley and the far side of Potrero Hill and parts of the Western Addition. Developments located in “nice” neighborhoods have far fewer problems with getting maintenance and crime-busting efforts.

This invisible curtain allows City Hall to use SFHA as a political asset. Funds intended to remove dangerous lead paint instead was used to beautify developments in time for the US Conference of Mayors meeting here a dozen years ago. The job had to be redone afterwards at twice the cost but Mayor Willie Brown got the photos he wanted. Later, during a controversial ballot measure, selected public housing developments were opened for early voting where it was expected most would vote as the mayor wanted. And so it goes.

It underscores a pattern I call “mismanagement by agenda” where a political agenda takes priority over proper management. Others might call it an abuse of authority.

Much more significant is the strategy to allow developers to convert public property to market-rate housing in exchange for rebuilding some public housing. This was Mayor Newsom’s HOPE SF, billed as a public-private partnership to replace the federal HOPE VI program Newsom declined.

Much of the worst public housing is on land that can be developed with greater density and is in neglected parcels that will offer great views and easier connections to Silicon Valley. The federal HOPE VI program that resulted in partnerships jumpstarted the process of rebuilding poor public housing by assuring potential financial partners that site control was guaranteed and initial funding was in hand. Lenders were more ready to participate in underwriting demolition and building new public housing.

It was a simple formula: as federal dollars needed for major rebuilding dwindled, funding came from local and state government housing funds, tax credits and banks and financial institutions acting in concert. The newly built properties remained under the control of the Housing Authority.

HOPE SF instead relies on developers rather than financial institutions and promises them development rights that will return maximum profit. By no coincidence it also brings political dividends in campaign contributions and support. Developers then partner with management companies, both for-profit and nonprofit, to operate the developments. The Housing Authority becomes a contract administrator and not a housing provider.

This is similar to the approach that resulted in turning over affordable housing to private companies like AIMCO that then failed basic property management as it sought to improve its corporate bottom line. Investors thousands of miles from San Francisco became the priority and tenants rated last. Without a public commission and process, tenants’ only recourse was to complain to the Mayor’s Office or to HUD. It took a lawsuit from City Attorney Dennis Herrera to force AIMCO to settle with multi-million dollar investments in San Francisco property. A HUD investigation revealed that shortchanging property management and transferring revenues was a pattern across the country with AIMCO.

This as-yet undefined approach appears to be the base models that Ed Lee now hints will be the future for all San Francisco public housing, a hybrid of the previous Brown/Newsom models. Corporate investment returns will be the measure of success, not the ability to provide decent, safe and sound housing. Whether this is desirable is a public policy question has yet to be debated and decided.

As the city population grows, and as income gaps widen, this could be a prescription for a sharp reduction in affordable housing options. More importantly, it also removes one layer of public accountability for management and policy as the commission system disappears.

Public housing is about more than just a roof. At its best, when run by a city administration that really cares, it includes programs that help move people to work, it understands the connection between housing location and access to public transportation to jobs, the placement of grocery stores and services, public library branches and police and fire services. When tenants succeed at increasing their income, it can allow for an income disregard of a portion of the increase if the funds are spent on health care or education to further improve and stabilize families. This is not something that private landlords often adopt.

These are not mere amenities but the building blocks of community and stable families. None of those are concerns for private landlords, even those with a nonprofit bent. Those are issues that get thrashed out in public sessions that can take a broader view, at a Housing Authority Commission or elsewhere. It calls for city government to bring all its programs, from land use to small business loans to after-school programs, into a conversation. For Mayor Lee, this is unfamiliar territory since his city government career over the past twenty years has been in agencies and departments that did not answer to a commission. As City Administrator, Purchaser or in other roles, Lee did not experience regular public testimony and a citizen commission that might look deeper than staff reports.

Mayor Lee hints that he wants nothing more than to be rid of public housing and the challenges it presents for better management and better living conditions. Undoubtedly there are a significant number of San Franciscans who would agree and many of those are the heart of Mayor Lee’s upscale constituency.

Whether this is in the best interest of the city as decisions are made today that will change the city for many tomorrows is a question that has yet to be asked, much less answered.